The Knockoff Economy: Thanks! And Some Responses to Reader Comments . . .

This is our last post guest-blogging at the VC and we again want to thank our hosts. A lot of interesting comments came in, and we’ll use this final post to address some of the issues and questions raised by readers. In no particular order:

Innovation vs. Variation. A few comments argued that a lot of what we discuss in The Knockoff Economy—such as innovation in font design, fashion, or food—is not really innovation but rather than variation, and as such these cases shouldn’t be used to draw any larger conclusions about IP policy or the nature of creative incentives. So, for example, one commentator claimed that “true innovation is game-changing.”

Our own view is that this misconceives what actually happens in the world, and also is inconsistent with the way our legal system treats innovation and creativity. In The Knockoff Economy we stress the importance of “tweaking” over “pioneering,” because we believe that in fact a lot of great innovations, even those thought to be pioneering, are really built on existing advances. A great example is one Mark Lemley has written about: Thomas Edison and the lightbulb. Edison is popularly valorized as a great pioneer, but Mark notes that there were no fewer than a dozen lightbulbs already. Edison’s great contribution was to “f[ind] a bamboo fiber that worked as a filament in the lightbulb developed by Sawyer and Mann, who in turn built on lighting work done by others.” One could say the same about Steve Jobs, whom Malcolm Gladwell recently called “the greatest tweaker of his generation.”

Of course, innovation can be game-changing, but most of the time it’s really just improving the same game, not replacing it. And our IP system, both patent and copyright, apply to both sorts of innovation. In fact, for copyright, the main focus of the book, the standard for advancement is quite trivial. Now, that said, there is something to the distinction between innovation and variation. In the fashion context, for example, there is a reasonable case to be made that a lot of creative output is reworking things that occurred before and varying them in some way. In fact, we make that case in the book. The important point from a legal view is that all this happens without a grant of monopoly rights over designs, and so from a policy perspective we don’t need to have the government step in to regulate (as, for example, Sen. Schumer is currently proposing.)

Analog vs. Digital Copying. Several comments pointed out that there is a big difference between analog and digital copying. We agree completely. In fact, we have a whole section of the book with that subtitle. However, that neither means that we can learn nothing from analog copies, nor does it mean that there is a sturdy wall between the two.

As we noted in an earlier post, it is possible to shift a business model toward analog in a way that garners a more reliable and less-easily-copied revenue stream. We give the example in the book of the Arclight theaters in Southern California. While movies are a classic digital good that can be perfectly copied and watched on a computer screen, the experience of movie watching is not. And so in the face of ever-easier downloading via torrents, some theaters have taken the approach of raising prices and services so that attending a movie is something that is experienced rather than merely consumed. And it works pretty well: in the case of Arclight, it has grown from one location a few years ago, to four, all the while charging upwards of $16 a ticket.

Music. A few people stressed how copyright is absolutely essential to great music. We devote an entire chapter in The Knockoff Economy to music, but we’ll just say this. In general we are supporters of IP rights. And we don’t advocate, in the case of music, abolition of those rights. At the same time, however, it is important not to overestimate the role of IP in incentivizing creativity in music.

In general, we suspect that people will invest in creating new music if the perceived benefits of doing so outweigh the costs. And we use the term perceived benefits advisedly, because, as we describe in the book, there are reasons to suspect that innovators (and not just in music) systematically overestimate the chance that their creative work will find market success, and that this overoptimism means that creators tend to anticipate larger gains from investment in new creativity than is probably warranted. So even when creators face possible losses from copying, their optimism means that we’ll get higher levels of creativity than we might otherwise anticipate.

That’s the benefit side. What about the cost side of the equation? It is also important to recognize that many of the same technologies that have made copying very easy have also made production and distribution much easier. So today, musicians can record and distribute their music from their homes—without expensive studios, engineers, or executives—and actually make a living at it. Maybe not a Rolling Stones-style living, but a living. And in the end, our copyright system is not about creating wealth but about creating art.

Cookbooks. We asked you for your thoughts about why, despite recipes not being copyrightable (or at best only thinly copyrightable) the market for cookbooks is so vibrant. (And for the readers who doubted our statement that recipes per se are not copyrightable, see 88 F.3d 473 and Nimmer on Copyright for further discussion.) A number of you provided explanations that we think comprise a major part of the answer. You noted that cookbooks are often expensively designed and printed, and so are attractive as objects, not just as manuals of cookery. People like sumptuous things, and will pay to have them, especially when the copies lack the look and feel of the original.

And here’s where copyright comes in. As we’ve said, copyright doesn’t do much (if anything) to protect the recipes in a cookbook. But it does protect the narrative that surrounds them,the illustrations that accompany them, and the design of the page – the “selection and arrangement” of design elements. And, often, the selection and arrangement of the recipes themselves – they can be copied singly, but not as a set (at least not if arranged in the same or a similar fashion). As a result, recipes can be copied, but cookbooks cannot be copied wholesale. This isn’t a lot of copyright protection, but it may be enough. Cookbooks are a low-IP industry, but they’re not a no-IP industry.

A couple of you also noted that cookbooks are status goods – i.e., they are useful sometimes not for the recipes they contain, but for what they tell your visitors about you (that you love Sicilian cuisine! And so you’re not quite as boring as you seem . . . ). In this way, cookbooks are like fashion goods – consumption of both is external (visible to others) and expressive ( sends a message that you want to communicate about your characteristics or social status).

In fashion, knockoffs are imperfect replacements for the originals they mimic, not least because if they are visibly inferior, as they so often are, they don’t send the same status message. And in the world of cookbooks, this is even more true. If you’re a single guy, you don’t impress the ladies by having on your coffee table a sheaf of recipes you’ve printed out from cooks.com. You have a cool-looking set cookbooks from David Chang and Nathan Myhrvold.